National Aluminium Co Ltd Institutional Investor Meeting Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Thank you so much for this kind introduction, sir. And in the interest of time, I would just ask you the questions which I have prepared in a very sequential manner, orderly manner and I hope you will be happy to answer those questions. So starting with the cost of production and the conversion ratio because that is the main backbone of our industry as such. So what is the average cost of production, sir, for bauxite and alumina and aluminum? If you can just broadly help us understand these numbers because it's a broad metric on which we want to work. So average cost of production for bauxite, alumina and aluminum.

Question: Hitesh Doshi - Nirzar Securities - Analyst : And what would be the conversion ratio on which we operate? Like for producing one tonne of alumina, how much is bauxite and --

Question: Hitesh Doshi - Nirzar Securities - Analyst : And sir, broadly what would be the power consumption in producing alumina and aluminum in units -- in number of units?

Question: Hitesh Doshi - Nirzar Securities - Analyst : 14,500 for producing alumina?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Metal, aluminum. And sir, in the whole cost matrix, if we can broadly break down the cost in terms of, let's say if we talk about alumina, so what is the major cost component? So like raw material, power. In percentage term, if we can split the cost.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yeah. Sure.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir this leads to me ask you our next question is we are also trying to expand and build new facilities like we are coming up with the alumina refinery. Then probably we are also in discussion of creating and smelter plant. With the new facilities, will this cost matrix be in line or there will be change? Because these are all legacy costs. So broadly, the cost going forward will be in the same metric or there will be some efficiency, some -- because of some savings in employee costs, et cetera? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : The cost will go up in the new model?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So as of now, what would be the landed cost of the caustic because we have a JV for caustic as well with GACL.

Question: Hitesh Doshi - Nirzar Securities - Analyst : And --

Question: Hitesh Doshi - Nirzar Securities - Analyst : Which is -- like which appears slightly higher than our peers because we have been tracking Hindalco also for comparison purpose. So do you have any understanding of why our cost is slightly on higher side or do they have a better sourcing arrangement?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So mainly because of the transportation, logistics costs.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Now I'm coming to CapEx -- yeah, sorry, sir. You were trying to say --

Question: Hitesh Doshi - Nirzar Securities - Analyst : I'm Hitesh here. So I think this is due to a we are far off from the source of the caustic.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, I'll come to the CapEx part now. The proposed CapEx of 1 million tonne of alumina refinery, which -- so are we on track to commence the operations by end of Q3 next financial year?

Question: Hitesh Doshi - Nirzar Securities - Analyst : And what would be, sir, in the initial years of operation, what is your view of production like capacity utilization from the new facility?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Full capacity. Also sir, there were cost overruns and slight delay associated with our proposed CapEx. As we have noted in our annual report also, like in FY23, we have around INR6,500 crore of budgeted CapEx and then in FY24, we have mentioned a slightly higher CapEx. So there would be factors including a change in scope or maybe regulatory approvals, things like that. Can you guide us with the breakup of what all has increased? Like there could be some cost escalation also. So what all has led to this increase in the CapEx if you can guide us?

Question: Hitesh Doshi - Nirzar Securities - Analyst : What kind of savings can we achieve, sir broadly?

Question: Hitesh Doshi - Nirzar Securities - Analyst : We have also gone through this central project monitoring website, sir. And they have mentioned that roughly 67%, 68% of our work has been completed in the sense that whatever the -- and the amount that they mentioned over the website is roughly INR5,700 crore whereas we are stating INR8,200 crore in our annual report.

Question: Hitesh Doshi - Nirzar Securities - Analyst : So will it include the power plant cost also?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So Pottangi mines (spoken in Hindi) roughly broadly?

Question: Hitesh Doshi - Nirzar Securities - Analyst : INR2,100 crore. And the conveyor belt which we are planning from Panchpatmali mines, that is separate. That is a separate --

Question: Hitesh Doshi - Nirzar Securities - Analyst : And power (spoken in Hindi)

Question: Hitesh Doshi - Nirzar Securities - Analyst : No problem. And sir, this conveyor belt that we are planning from Panchpatmali mine because we are also about to start the Pottangi mine.

Question: Hitesh Doshi - Nirzar Securities - Analyst : In your opinion, what all benefits can approve from this additional conveyor belt from Panchpatmali to our fifth stream of alumina refinery?

Question: Hitesh Doshi - Nirzar Securities - Analyst : It's a compulsion. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : No. So are we expecting some delays in commencement of Pottangi operation? That is why we are taking this --

Question: Hitesh Doshi - Nirzar Securities - Analyst : So for Pottangi, we have all clearances and all approval in place?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Excellent. Very, very heartening to hear this, sir. The only question that comes to my mind now is that after commencing Pottangi mines also, we will be having two sources for the fifth stream. One is the conveyor belt which we are just trying to install from the Panchpatmali mines and then we have a Pottangi. So we will be having a double source over there? Will there be (multiple speakers)

Question: Hitesh Doshi - Nirzar Securities - Analyst : (spoken in Hindi) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So sir, what is my query is that Panchpatmali is already sufficient to run current size of the operation, and you are putting -- you are expanding in Panchpatmali also, right?

Question: Hitesh Doshi - Nirzar Securities - Analyst : There was a slight confusion that the conveyor belt that we are proposing is from Panchpatmali to the fifth stream, right?

Question: Hitesh Doshi - Nirzar Securities - Analyst : (spoken in Hindi)

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, the current reserves that we -- that was stated long back, I -- we have (technical difficulty) So what was mentioned in the annual report, sir, I'm quoting it from annual report that there might be delay in commencing operation from Pottangi mines that is why we have a plan to install a conveyor belt from Panchpatmali to the fifth stream of alumina at a cost of INR450-odd crore.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, you will have extra capacity for bauxite because of the -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : We will be able to use it by some brownfield expansion or what is the plan further? Yeah.

Question: Hitesh Doshi - Nirzar Securities - Analyst : There is no further scope only.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, on the reserve side, we have a data dated back to 2009 where we have stated around 376 million tonnes of reserve for our bauxite ore. So what could be the current remaining resources in your assessment and is there a possibility of a reevaluation of the resources of the bauxite ore resources?

Question: Hitesh Doshi - Nirzar Securities - Analyst : No problem, sir. And similarly, sir, for the Utkal --

Question: Hitesh Doshi - Nirzar Securities - Analyst : But then cost of production will also go up in that ore. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So it may be up by $20, $30 or --

Question: Hitesh Doshi - Nirzar Securities - Analyst : 110 million tonne with 7% guidance.

Question: Hitesh Doshi - Nirzar Securities - Analyst : And sir, if any change in, let's say, from 4% to 7% when the guidelines had changed, so the cost of production rises by about $20, $30 or more than that?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So broadly, what would be the sensitivity like from -- if we're using 3% silica and then go to 4% silica? So --

Question: Hitesh Doshi - Nirzar Securities - Analyst : For every 1%, there is a cost of $10. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So similarly, our coal blocks where -- which are at Utkal-D and Utkal-E. Utkal-D, we have already commenced and that has resulted in a very good amount of savings for the company. What is the status of Utkal-E, sir, as of as -- as we speak?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Additional 1.3 million tonne?

Question: Hitesh Doshi - Nirzar Securities - Analyst : 3.3 million tonne. That was also very heartening to hear. And the reserves that we have -- that were stated for Utkal-D and Utkal-E were approximately around 176 million metric ton. So is there any reassessment for those metrics?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Is there any plans for acquiring any new bauxite plants, mines or coal mines at present?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So what we have understood is that those 2015 and specifically, 2021, there was a regime change. And earlier, the mines were reserved for PSUs. So as of now, there is no mine which are reserved for PSUs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : Is there any preference or any preferential treatment?

Question: Hitesh Doshi - Nirzar Securities - Analyst : When we talk to many PSUs, when they come to attend conferences and other purposes, we have learned that under the leadership of Modi ji's current government, almost all PSUs have hired big four consultant, one of the big four consultants to -- for the organization and the company to grow and become more lean and mean and become national champions and globally admired companies. So have we hired someone on the same lines? I don't want the name but just have we hired any global consultant in last sometime to take the NALCO to another higher level. Is the aspiration of the government and the company?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So we would have hired one, two year back or much, much longer before?

Question: Hitesh Doshi - Nirzar Securities - Analyst : (spoken in Hindi) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, when we talk to say power companies like NHPC or SJVN and like in case of SJVN when they hired some consultant and the company which was producing one or two gigawatt in last 20, 25 years, next 10 years, they are going from 2 gigawatt to 25 gigawatt. That kind of growth plan is lined up at the country. I mean other NHPC also and few other finance PSUs when we talk to REC PSUs. And second thing is that a country like China produces 45 million tonne of aluminum. And we are aspiring to be the third largest economy, and I think we have a good bauxite reserves now. We have good coal mines, and we have good -- we have globally competitive power rates in our country. So how do you see that and how we are placing ourselves because we are as compared to say China or other country -- sorry?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So are we planning to take country to next level of aluminum and aluminum production, which is the metal of the future? We are reasonably low-cost producer. And so that is my question. And like country like New Guinea is producing 120 million tonne of bauxite. China is producing 45 million tonne of aluminum. And India looks very small in whole this game. And what are -- what is our vision statement on that kind of -- how do you see this opportunity? And yeah.

Question: Hitesh Doshi - Nirzar Securities - Analyst : So I'm just having a few questions on production and sales and maybe. So how do we generally affect our alumina and aluminum sales? Like in terms of spot, how much is through spot, how much through a forward contract or a short term, long term contract and how to link it with the LME pricing?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So it's a good -- it's excellent strategy I would say that taking (multiple speakers)

Question: Hitesh Doshi - Nirzar Securities - Analyst : So what was the exit realization last quarter -- for the last quarter?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yes.

Question: Hitesh Doshi - Nirzar Securities - Analyst : And that would be average realization?

Question: Hitesh Doshi - Nirzar Securities - Analyst : And what is the current pricing scenario?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Higher than this.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Around $600, maybe around $600.

Question: Hitesh Doshi - Nirzar Securities - Analyst : $600 plus. Sir, secondly, when we affect alumina transfer to aluminum division for producing metal, so at what price generally do we transfer pricing?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Cost?

Question: Hitesh Doshi - Nirzar Securities - Analyst : The cost of production?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Maybe Manav, you can take the next questions, and I'll get back in the queue.

Question: Hitesh Doshi - Nirzar Securities - Analyst : The mind of state government or the central government?

Question: Hitesh Doshi - Nirzar Securities - Analyst : State government.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Just Manav, one minute. So you mean to say the state government is not favor of retrospective also and prospective also? That is what is your view, sir?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yes. Manav?

Question: Hitesh Doshi - Nirzar Securities - Analyst : And sir, the related question which Manav has just asked is in this CapEx of INR17,000 crore, have we also included the alumina capacity that would be required like for 0.5 million, at least we would be requiring about 1 million of -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So that INR17,000 crore would be only for only for smelter.

Question: Hitesh Doshi - Nirzar Securities - Analyst : And any recycling or will it be a future ready plan meaning that if any -- if at all any future expansion if you want to incur, so the infrastructure would be future ready for the CapEx, the initial CapEx --

Question: Hitesh Doshi - Nirzar Securities - Analyst : Because why this comes to our mind is that the INR17,000 crore, what we study and what we understand from the published public domain information for our industry and other peers, it is quite steep. So just wanted to have an understanding whether it is for future. Because recently Hindalco and others have announced their CapEx plans. They are incurring INR8,000 crore, INR9,000 crore of CapEx for 1 million tonne of alumina -- 0.5 million tonne.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Could you just explain this once again? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : My thing is that if you're spending roughly double the amount to produce same thing, what kind of technology benefit on cost we can have whatever you are upgrading the technology as you are saying, what can be cost benefit we have of that?

Question: Hitesh Doshi - Nirzar Securities - Analyst : We can say INR800 crore to INR1,000 crore per year for producing 0.5 million, how much it 0.5 million --

Question: Hitesh Doshi - Nirzar Securities - Analyst : We'll send you whatever we have read through published information and whatever presentation they have given to other investors.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yes. Manav?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yeah. Sir, I'm Hitesh here, sir. I think it has been a very transparent and very forthcoming and very impressive answers from you and beyond our expectation. And sir, what can be the reason for the company 5, 10 years in terms of alumina and aluminum capacity going forward? And second thing, I think the aluminum is not so profitable for us. So what is our thinking over there? Like would we like to go more for alumina going further? How can we acquire more mines and what can heighten your vision in terms of our capacity expansion?

Question: Hitesh Doshi - Nirzar Securities - Analyst : The second thing is that as you said, we just -- we have the Hindalco's 3.5 lakh tonne expansion and its cost. If we have your email ID, we will just exchange it with you on email. Just to know --

Question: Hitesh Doshi - Nirzar Securities - Analyst : And the second thing is, this will produce 0.5 million tonne of aluminum will require roughly INR4,000 crore of power as per the numbers given by you, which we just calculated. So there can be a power saving of 20%, 25% with a much better technology. That is -- that can be the thing, sir? Can we --

Question: Hitesh Doshi - Nirzar Securities - Analyst : Be one of the most efficient plants in the world, what we are going to?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, can you tell something about the KABIL JV and whatever we have done in some foreign countries and what is the reason of the company and government --

Question: Hitesh Doshi - Nirzar Securities - Analyst : Can we -- can you tell us something on the KABIL JV whatever assets we acquired abroad on that and what can be vision for the company and the government on that side? And I think government is talking about tax benefits to -- for the rare earth minerals and all that. So what can be big picture over there? Can we become really large in terms of volume and profitability with where I think the private sector cannot enter in another? The government is not in favor of -- is in favor of doing things with the PSC?

Question: Hitesh Doshi - Nirzar Securities - Analyst : That was very heartening to know, sir. Again, one or two questions maybe on the global scenario because we have seen that and in your annual report also you have mentioned that the Chalco, the China Aluminum Company has signed a framework agreement in Guinea to form a alumina refinery over there. So how do you see this development, what would be the scale?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Yeah. So few things on the annual global scenario we have mentioned in the annual report also that Chalco, the China Aluminum Corporation has signed a framework agreement with Guinea to set up an alumina refinery over there. So how do you see this development vis-a-vis our alumina production and what could be their scale at Guinea? And how is this Guinea bauxite over if we compare it with our bauxite?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Sir, I think the major focus of the company is as per your -- as per what I'm understanding is to go in value added products from here. So what can we rule? When can we roll out this? What kind of CapEx we can see in next five year and what kind of return ratios we are looking to this expansion?

Question: Hitesh Doshi - Nirzar Securities - Analyst : But sir, we already have 0.5 million tonne of aluminum. So we can't expand on value added products in that facility. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So all the future CapEx will come after 2020 and that also on value added product, not on the basic metal. We are not planning anything right now.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Manav, you have something to ask or --

Question: Hitesh Doshi - Nirzar Securities - Analyst : And sir, when could this be a mining auction (technical difficulty)

Question: Hitesh Doshi - Nirzar Securities - Analyst : You said you may acquire more mines for future expansion. So please give some color on that. So what kind of plans we have and when can we expect more 1 million tonne, 2 million tonne more of alumina from our company because we have preferential --

Question: Hitesh Doshi - Nirzar Securities - Analyst : There also, we will do the mining ourselves or like Hindalco recently done with the Odisha Mineral Corporation that they just acquired bauxite from the JV rather than producing themselves the bauxite mining? We would like to go for our own mining, or we can acquire from someone like OMC, the bauxite and then we can go and --

Question: Hitesh Doshi - Nirzar Securities - Analyst : So it may happen in next 6, 12 months?

Question: Hitesh Doshi - Nirzar Securities - Analyst : So we can become a 6 million tonne, 7 million tonne kind of alumina company going forward?

Question: Hitesh Doshi - Nirzar Securities - Analyst : The big picture is to become a very big company, right?

Question: Hitesh Doshi - Nirzar Securities - Analyst : And where can we get this vision document or is it internal? You are saying the vision document?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Where can we find the auction details, sir?

Question: Hitesh Doshi - Nirzar Securities - Analyst : The mines which are coming for auction, just for because we are tracking the sector. So where can we know about this?

Question: Hitesh Doshi - Nirzar Securities - Analyst : Bauxite reserves are a little understated and we are not in lines of countries like Guinea or other countries where we can see huge reserves, but India is a country showing very less reserves. So you think we are under underexplored and under as a country or as a company, we can make up our mindset, we can add our reserves? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / NTS, NALU.NS - National Aluminium Co Ltd Institutional Investor Meeting

Question: Hitesh Doshi - Nirzar Securities - Analyst : So we as a country, we can have much more reserves you think?

Question: Hitesh Doshi - Nirzar Securities - Analyst : It can be substantially higher than current? My last --

Question: Hitesh Doshi - Nirzar Securities - Analyst : Thank you so much.

Question: Hitesh Doshi - Nirzar Securities - Analyst : I hope to connect with you in the future.

Question: Hitesh Doshi - Nirzar Securities - Analyst : Thank you, Manav and thank you, Yes Bank for organizing this.